India in for telco M&As, executive exodus

Dylan Bushell-Embling
25 Oct 2011

As the Indian government steps up efforts to address overcrowding in the nation's telecom sector, reports have surfaced that many mobile executives have given up on the segment altogether.

India's Department of Telecom has asked regulator Trai to review existing M&A guidelines, Times News Networksaid.

The current rules include a prohibition on mergers if it would decrease the amount of service providers in a given telecom circle to below six, but the department instead has suggested that the minimum amount of providers in an area should be based on population.

When new telecom minister Kapil Sibal was appointed late last year, he indicated he will review ways to facilitate M&As to address overcrowding and spectrum shortage issues in India's mobile market, where 14 mobile operators are vying for customers.

Last month, the department was asked to formulate an exit policy aimed at newer mobile operators, and told to evaluate options including buying back spectrum licenses from the telcos.

But this may be coming too late. The cutthroat competition, mounting debt and slowing customer additions have combined to cast a shadow on the sector, once considered a golden child of the emerging Indian economy.

As a result many executives - including reportedly top executives from Bharti, Tata Teleservices and reliance Communications, have cooled on the sector and plan to jump ship, ETsaid.

One phone company reporter stated that “India's telecom story is over,” complaining that industry revenue has not grown in two years.

ET also quotes a headhunter as stating that at least three CEOs of telecom companies are now looking for new jobs outside of the sector.

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